Goldsmith bill on personal grievances

Executives who are fired from their companies would be less likely to get excessive golden handshakes under a private member’s bill being promoted by National list MP Paul Goldsmith.

And employers would be less willing to put up with high-paid staff not doing their jobs properly.

But it appears that Mr Goldsmith would have more chance of his bill being passed under a Labour-led Government than the National-led one.

Mr Goldsmith is proposing that employees with salary packages worth more than $150,000 not have the automatic right to a personal grievance, which they have under present employment law.

This is a very commendable bill. It doesn’t mean that employees over $150,000 will not have access to employment law. It means that they can contract out of it. And it is hard to argue that someone earning $150,000 is a vulnerable worker who needs protection.

They will still have access to general contract law, and can sue for breach of contract.

Under the current law, even if an employee is paid out under the terms of his or her contract, they can still take a personal grievance case to try to get a higher payout.

Mr Goldsmith says that means that employers are more likely to put up with someone who is not doing the job well or “make a more generous golden handshake to make the problem go away”.

He said he had been approached by business, and small business in particular, who saw it as a problem.

His bill did not go as far as Australian law which automatically exempts a high-paid employee (earning over A$129,000) from being able to take a personal grievance.

The Goldsmith bill just allows a high earning employee and an employer to sign a contract that limits personal grievances. So it might just say that in the event of an inability to work together, the employee will get paid x weeks salary.

The bill has been put into the private member’s ballot. Labour Minister Simon Bridges said while National supported the proposed bill, the Government would prefer to get officials’ advice.

But Labour’s labour spokesman, Andrew Little, said last night that it was the sort of thing a Labour-led Government would be keen to look at, especially for chief executives.

He had a concern with the $150,000 threshold because it could include highly skilled engineers, for example, working for companies such as Fonterra, who were well down the chain of command and control over the company.

Subject to a discussion about the threshold, he agreed with the bill in principle and thought Labour would support it to select committee.

The threshold seems right to me. It isn’t about the job title. Andrew seems concerned that it might impact some EPMU members, but if an engineer is earning over $150,000 they seem pretty capable of negotiating a good contract.

Chi Hsu

The bill has been put into the private member’s ballot. Labour Minister Simon Bridges said while National supported the proposed bill, the Government would prefer to get officials’ advice.

Any particular reason why this was such a passionate issue for Goldsmith that he would go out of his way to draft a PMB on it? Call me a conspiracy theorist but the above sentence leads me to believe that this is one of National’s backup public favour appeasing strategies which luckily happened to be drawn from the ballet – there’s no votes to lose in going after highly paid executives yet the publicity will always be favourable in this tall poppy syndrome country.

Warren Murray

What a load of bollocks! Income thresholds do not determine whether someone is vulnerable. A host of factors can affect whether someone is vulnerable. A high income earner who is highly leveraged might be vulnerable. A low income earner whose partner is a high income earner might be less vulnerable.

I prefer the principle of One law for all, so if you are going to allow people to opt out of employment law ‘protection’, it should be open to every one to do so, not just people over a specified income threshold.

As we saw with the new income tax threshold set by Cullen after Labour won in 1999, arbitrary thresholds become obsolete over time, often quite quickly.

ben

One of those issues that the left and right can agree on, for completely different reasons. I think it is a fantastic idea. It will probably have the effect of raising high end salaries, both by raising productivity, by having some of the avoided investment in up front interview and search passed back to the employee, and by having people near the threshold pushed over it by firms keen to reduce litigation risk. Hopefully it will create demand from those below 150k for similar relief.

Andrew Little’s mistake is to think employment law protects employees on these salaries, and so he is all for it as a way to get those rich fellas. Ugly stuff from him but it gets the right result.

Camryn

Warren Murray – Totally agree. If it does go ahead despite being stupid, I hope they at least set the threshold in terms of something relative (e.g. standard deviations from the mean wage) instead of something absolute. Just like your retirement age should be when you reach x% of your genders life expectancy at birth. Eventually, parliament is going to become 100% occupied with bills to adjust arbitrary fixed thresholds in their own bills!

Camryn

NK – It’s not such a clear argument when the debate is not about freedom of contract for all versus none but for some versus none. It introduces the principle of “one law for all” (which is also a tenant of the right) in conflict. I.e. it’s not surprising some people would rather not see an introduction of greater freedom to contract for only a subset of people – they may approve of freedom to contract but disapprove of any violations of their equality before the law principles.

seanmaitland

If you’re on 150k, then you aren’t vulnerable at all – if you’re getting paid that much, then you are good at what you do and you could walk right into another job straight away.

I’m on 120k and have no fear whatsoever of losing my job and having to look for a new one, despite being highly leveraged (950k of bank loans). All I would see it as is an opportunity to get a pay rise.

The first problem is the $150K. We have laws on the books enacted in 1908 with a penalty of one pound $2 per day as the penalty. All laws with monetary amounts in them should have an automatic inflation proof otherwise over time the original amount is eroded and the intent lost.

Second problem is it wont stop the stupid golden hello and golden goodbyes that stupid company directors of our listed companies allow CEOs and senior execs to write into their contacts. Rem consultants are the real culprits putting the frighteners on dumbarse directors “If you don’t include these you wont get the best talent” BULLSHIT.

We have far too many over paid execs in our PLCs. Give me the chance and Id halve the salary bill and get a better result from committed people rather than the gypsy execs who float from job to job until their incompetence is discovered and they are paid off WITH an excellent reference so they can get the next job.

ChrisM

In answer to Spam, I am CPEng and in IPENZ, being paid well over $100k and belong to the EPMU. Like Andrew says, we are way down the pecking order and I have no-one working under me. The pay relates to skills responsibility, not management. That doesn’t mean I agree with what Mr Little says, but we do exist in the situation he outlined.

Tempist

Be nice to see some actual analysis of the number of ERA/EC cases which would be affected by a salary-package threshold, otherwise just seems like a happy coincidence of prejudices.

Seem to recall a number of overseas jurisdictions have salary bars on who can take a case through the specialist employment jurisdiction. As recall these coutnries/states have acluster of salary packages just above the threshold. Understandably really – if, as an employer, I thought a job/candidate was worth $145k, but if I could pay $150k I’d insure myself against the risk of an expensive Employment Court case I’d be convinced to up my offer by $5k.